Worries of a correction continue in “sizzling” Dallas, Denver, Houston, and other markets.
Written By Paul Bergeron | September 14, 2021 at 06:58 AM
There’s a floor underneath every ceiling and rising housing prices in several key markets has one real estate economist saying that there’s much better economic standing for consumers choosing to rent right now in those areas.
Strong demand for homes, near-record-low mortgage rates and a shortage of properties for sale keep pushing prices higher in much of the country, making it more advantageous for consumers in Dallas, Denver, Houston, Kansas City, Seattle and Miami to rent and to postpone ownership, according to second-quarter figures from a national housing index created by researchers at Florida Atlantic University and Florida International University.
“In these housing markets, worries of a correction continue,” said Ken H. Johnson, Ph.D., co-author of the Beracha, Hardin & Johnson Buy vs. Rent Index, and a real estate economist and associate dean in FAU’s College of Business.
“At this time, buying carries considerable risk,” he said in prepared remarks. “Consumers can build wealth faster if they sit out these sharp price increases and instead rent a similar property and reinvest their savings in a portfolio of stocks and bonds.”
The FAU and FIU researchers analyze 23 major US metropolitan markets, factoring in home prices, rents, mortgage rates, home maintenance costs, homeowner association dues and other household expenses.
The index also shows renting and reinvesting beats buying in: Atlanta, Los Angeles, Pittsburgh, Philadelphia, San Diego, Minneapolis and Portland, Oregon.
Buying and building equity makes more sense in Chicago, New York, Honolulu, San Francisco, Cincinnati, Boston, Cleveland, Detroit, Milwaukee and St. Louis.
The index helps to counter the traditional argument that homeownership is far superior to renting over the long term. The BH&J Buy vs. Rent Index, first published in 2013, shows that renting and reinvesting can be equally or more lucrative for disciplined savers.
